Page 1

1

REPORTABLE           

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7373 OF 2005

STANTECH PROJECT ENGG. PVT. LTD.   …APPELLANT

VERSUS

NICCO CORPORATION LTD.                                       …RESPONDENT    

WITH

C.A.NO. 7374 OF 2005

J U D G M E N T

VIKRAMAJIT SEN, J.

1 Both  these  Appeals  assail  the  common  impugned  Order  passed  by  the

Division Bench of the High Court at Calcutta on 29.9.2003, setting aside the Order

passed  by  the  Company  Judge  rejecting  the  plea  of  the  Respondent  that  the

so-called  concession  made  by  the  Junior  Counsel  should  not  be  given  curial

recognition.       

2 The facts,  succinctly  stated,  are  that  the  Appellant  had filed  Winding-up

petitions against the Respondent on the asseveration that debts admittedly payable

by the Respondent to the Petitioner had remained outstanding even subsequent to

Page 2

2

the issuance of a statutory Notice issued under Section 434 of the Companies Act.

1956.   Keeping in perspective the nature of the question of law raised before us,

we need not go into the genesis or the characteristics of the contract between the

parties.  So far as Civil Appeal No. 7373 of 2005 is concerned, the claim was for a

sum of Rs.3,54,500/- together with interest at the rate of ten per cent per annum

together  with Rs.1,09,958/-  deducted by the Respondent  on account  of  the tax

deducted at source (TDS).  These amounts have remained unpaid even after the

receipt of the statutory notice.  It is palpably clear that the statement made by the

learned counsel for the Respondent that these amounts would be paid in ten equal

installments  commencing  from  16.8.2002,  was  so  done  in  order  to  avert  the

ordering of an advertisement/citation in the proceedings by the Company Judge.

In  Civil  Appeal  No.  7374 of  2005,  the  claim was  for  a  sum of  Rs.8,08,314/-

together  with  interest  at  the  rate  of  ten  per  cent  per  annum  together  with

Rs.1,24,984/- which had been deducted by the Respondent on account of TDS.  It

appears that these amounts were admitted by the Respondent in terms of its letter

dated  8.2.2000  as  also  in  the  Affidavit  of  the  Manager  (Corporate)  of  the

Respondent  who,  at  the  material  time,  was  its  Principal  Officer.   In  the  said

Affidavit, it was admitted that the total amount payable was Rs.8,05,664/- which

was  being  retained  awaiting  final  clearance  from TISCO who  had  floated  the

subject turnkey project.  As in the foregoing instance, the Company Judge recorded

Page 3

3

the statement of the counsel for the Respondent offering to pay the principal sum

of  Rs.8,05,664/-  together  with  Rs.1,24,984/-  in  four  equal  installments

commencing from 6.8.2002.  It had been made clear by the Company Judge vide

Orders dated 24.7.2002 that  if  these payments were not  made,  the Winding-up

petitions would stand admitted and it would be open to the Appellant to pray for

advertisement/citation.   A fortnight  later, i.e.  on 8.8.2002, the foregoing Orders

were modified by the consent of the parties to the effect that it would be open to

the  Respondent  to  pay off  the  dues  together  with the interest  accrued in  eight

monthly installments instead of four monthly installments as was directed in the

Order dated 24.7.2002.   

3 In these circumstances, these orders passed on the concession of the learned

counsel for the Respondent were challenged by the Respondent before the Division

Bench  of  the  High  Court,  which  we  cannot  but  view  as  extraordinary.   The

Division Bench disposed of the Appeal in terms of its Order dated 6.1.2003 with

the observation that an application should be preferred before the learned Company

Judge for modification of the order, which were assailed before this Court.  We had

disposed  of  the  Special  Leave  Petition  on  3.3.2003  thus:-  “Whether  such

application for modification is at all maintainable is a question which is expressly

left along with other questions for being decided by the learned Single Judge if and

when such application for modification is filed by the Respondent”.   

Page 4

4

4 Thereafter, a  detailed Order  came to be passed by the learned Company

Judge  on  22.8.2003  rejecting  the  prayer  for  re-hearing  or  modification  of  the

consent  Order,  primarily  on  the  premise  that  the  so-called  junior  and  an

inexperienced counsel had rightly made the statement that the admitted debt would

be  paid  in  installments.    The  learned  Company  Judge  had  recorded  that  the

Respondent Company was fully aware that Winding-up petitions were going to be

admitted,  which  situation  is  always  stigmatic  and  therefore  to  be  strenuously

avoided since it inexorably leads to a commercial death.   The learned Company

Judge found the conduct of the Respondent not to be bona fide.  The second salvo

of  litigation,  therefore,  proved  to  be  unsuccessful  so  far  as  the  Respondent  is

concerned as the petition/application was dismissed by the Company Judge with

costs assessed at 600 GMs.  Thereafter, these Orders dated 24.7.2002 came to be

assailed once again before the Division Bench, which then passed the Orders now

impugned before us.  The Division Bench was of the view that the concession was

made  mistakenly  by  the  counsel  appearing  for  the  Respondent  and  on  this

predication, the Order was set aside and the Company Petition was remanded to be

heard once again.   

5 We find no justification whatsoever, in law or in equity, for the rationale

adopted by the Division Bench in the impugned Order. The Company Judge had no

alternative but to proceed for Winding up of the Respondent Company since it had

Page 5

5

failed  to  discharge  the  admitted  debt  even  after  the  service  of  the  afore-noted

statutory  notice.    The  said  junior  Advocate  of  the  Respondent  had,  in  fact,

displayed legal sagacity in getting the winding-up of the Company postponed and

avoided the publication in the Winding-up petition by praying for and obtaining

leave to pay the debt in installments.  Had he not done so, the Respondent would

have had to pay the entire debit at  once or face certain commercial  death as a

consequence publication/citation of Winding-up petition.  It is note worthy that the

Respondent so is transacting business even today.  The Division Bench has been

inexplicably and unjustifiably considerate towards the Appellant.   It is this kind of

leniency that results in proliferation and prolongation of litigation, which approach

has led to an almost insurmountable pendency of litigation.  Learned counsel for

the Appellant rightly relies on the decisions of this Court in Shrimati Jamilabai

Abdul  Kadar  v.  Shankarlal  Gulabchand   (1975)  2  SCC  609  and  State  of

Maharashtra v. Ramdas Shrinivas Nayak (1982) 2 SCC 463.   

6 We accordingly  set  aside  the  common  impugned  Order  of  the  Division

Bench of the High Court.  The Respondent has abused the judicial process in order

to delay the discharge of an acknowledged debt for almost a quarter of a century, in

which period it has continued in business.    

7 These Appeals are allowed.  We, however, modify the Orders of the learned

Single  Judge  by  directing  the  Respondent  to  pay  the  said  admitted  dues  of

Page 6

6

Rs.3,54,500/- and Rs.8,08.314/- together with interest at the rate of ten per cent per

annum, as also the costs imposed by the learned Company Judge at 600 GMs.  If

the two sums of TDS of Rs.1,09,958/- and Rs.1,24,984/- have not been deposited

with the Income Tax Department, these sums shall also be paid to the Appellant.

The Respondent  shall  also pay to the Appellant  the costs  of  these proceedings

quantified at  Rs.20,000/-.   All  these amounts  are  payable  within 45 days  from

today.  No extension for payment shall be granted since the accommodation and

the indulgence granted by the learned Company Judge has been abused by the

Respondent.  In the event of failure to make the above mentioned payments, the

Appellant shall be entitled to once again move the learned Company Judge, who

will thereupon admit the Winding-up petition, and proceed with expedition under

the relevant provisions of law.   

…………………………………J. [VIKRAMAJIT SEN]

…………………………………J. [SHIVA KIRTI SINGH]

New Delhi, August 13, 2015.